1. Pay down your primary mortgage or HELOC (Home Equity Line of Credit) from your personal checking, savings, stocks or mutual funds. Since the value of your primary residence, mortgage and HELOC do not factor into determining your Adjusted Net Worth, paying down your primary mortgage or HELOC can help reduce your Adjusted Net Worth.

2. Invest funds from your checking, Savings, Stocks or Mutual Funds into the business. You may be allowed to infuse personal funds into the business if your firm meets certain requirements. To determine whether this will be allowable in your unique case, an RMA (Risk Management Association) analysis must be performed.

We can perform an RMA analysis to see whether or not the SBA would allow you to infuse personal funds into additional Paid-In Capital. This may help drive down your Adjusted Net Worth to below the regulatory limit of $250,000.00. The keyword is “Allow”. The SBA will allow you to infuse additional funds into the business concern if it is found to be economically disadvantaged, by SBA Standards, at the time of the infusion of Additional Paid in Capital. In order for the SBA to determine that the business concern is found to be economically disadvantaged it utilizes data from the firm Risk Management Association (RMA) and its compiled figures/ratios to see if your firm exceeds 4 or more of the 7 figures/ratios to be discussed below. These figures/ratios compiled from RMA basically allow the SBA to compare your firm to other similar firms which are operating within the same NAICS code and also are within the same sales range (e.g. 0-1MM) against the following 7 figures/ratios:

1. Total Assets

2. Current Ratio (Current Assets/Current Liabilities)

3. Debt/Net Worth Ratio

4. Net Worth

5. Net Sales

6. Pre-Tax Profit

7. Sales/Working Capital Ratio

For more ways to reduce your Adjusted Net Worth or if you have questions about the SBA 8(a) Program, please call us at 813-333-5800 or visit www.cloveer.com.